|
|
|
|
This
Island Idyll Can be a Paradise for Income Investors |
Published:
January 7, 2008
New
Zealand is one of the world's most beautiful countries, full of
rolling meadows, breathtaking mountain ranges and unspoiled
shorelines that stretch from the tropics to the edge of the
Antarctic region. With only four million citizens, it's a lovely
place to travel if you love scenery but hate crowds. And it's
also a potentially gorgeous source of investment opportunities,
especially if you like high-yield securities.
New Zealand's economy traditionally has been heavily dependent
on agricultural exports -- especially food (meat, vegetables,
seafood and dairy products), wool and wood products. Tourism is
a small but growing segment of the economy, and thanks to the
Lord of the Rings trilogy, which was filmed in the island
nation, New Zealand's film industry is thriving as well. The
country has significant natural gas reserves, which help supply
its own energy needs. And like Australia, New Zealand is
benefiting from the general economic boom in Asia; unemployment
recently stood at only 3.6%.
New Zealand's stock market has risen significantly over the past
four years, driven by strong economic growth -- boosted by
rising agricultural-commodity prices and a sharp increase in the
value of New Zealand's dollar vs. the U.S. dollar. Heightened by
their traditionally high dividend yields (see my "New Zealand
Yields" chart below), Kiwi stocks delivered a total return of
more than +120% between March 2003 and October 2007.
 Will the good times continue? They might, but perhaps with a
little less force.
Although New Zealand's agricultural exports are likely to
continue to enjoy robust demand from the burgeoning middle class
in China and elsewhere in Asia, the country's strong economy has
forced a series of interest-rate increases that are likely to
slow growth. In fact, most experts look for New Zealand's GDP to
grow only +2-2.5% in 2008.
But even at that modest growth rate, New Zealand is more than
worth our while to visit as income investors. That's because the
country boasts the world's highest-yielding stocks: 7.3%, on
average. That's not a typo. With the average large-company stock
in the U.S. yielding a puny 2%, it's a crime not to investigate
New Zealand's market if you're in search of income.
Why do New Zealand's stocks yield so much? Partly because the
country's tax laws create incentives for higher dividend
payouts; partly because New Zealand's publicly traded companies
want to attract foreign investors; and partly because of a quirk
in New Zealand law.
New Zealand withholds 15% of dividend income paid to most
non-resident shareholders -- including those from the U.S. But
many companies boost their payout to foreign investors to make
up for the withholding -- and the New Zealand government
actually subsidizes them for doing so. Again, attracting foreign
investors is a priority for this small, geographically remote
country. Meanwhile, U.S. investors can still retrieve the 15%
withheld by requesting a foreign tax credit. The end result is a
truly superior dividend yield for Americans investing in New
Zealand's highest-yielding stocks.
Several attractive Kiwi companies boast high yields, but the
most interesting one today is one of the country's biggest
companies; it's also a special situation with excellent
total return potential. . .
Important Note: Throughout
the remainder of this article,
High-Yield International
editor Nick Lanyi provides an in-depth profile on a dominant
Kiwi company with an amazing 10.3% yield. However, in order to
view this profile, you'll need to subscribe to
our premium international income investing newsletter --
High-Yield
International. After you subscribe, you'll
receive immediate access to this full article, as well as our
monthly
High-Yield International newsletter and a host
of additional premium content. Please visit one of the following
links to continue.
Good investing!
Nick Lanyi
Editor
High-Yield International
http://www.StreetAuthority.com
| To
receive in-depth guidance on today's leading international income investing
opportunities each month, plus access to Nick's model portfolios,
please subscribe to Nick Lanyi's premium newsletter --
High-Yield
International. |
|
|
Income Security
of the Month
Our "Income Security of the Month" for August 2008 invests in a
fast-growing overseas market that doesn't get much exposure in the
mainstream financial press. And although it typically makes enormous
annual dividend payments -- it has paid an average dividend of
25.5% per year over the past five years -- this fund is perhaps
most appealing for its total return potential. Specifically, the
fund has delivered total returns of +178.9% since 2003,
and it ranks in the top 10% of its category over the past decade.
|
Top
10 Stocks for 2008!
Since we began publishing this report back in 2003, the picks we've
featured have consistently beaten the broader market -- delivering average
gains of +21.3% per year and outperforming the S&P by a nearly
2-to-1 margin. Act now to reserve your copy of our newest report -- Top
Ten Stocks for 2008. |
|
|
